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When Will Siri Live Up to Its Potential for AAPL?

Last summer, Apple (AAPL) announced a new iOS in the Car initiative, starring its intelligent personal assistant, Siri. Partnerships with leading auto manufacturers including General Motors (GM) and Honda (HMC) were announced, then things went quiet for months.

At the Geneva Auto Show Apple has announced iOS in the Car will be available in new cars starting in 2014 under the new name of CarPlay. Siri is getting a starring role with a “Voice” button on steering wheels to interact and control everything from navigation to music selection and handsfree calling and texting.

But is Siri up to the task?

siri-aaplThere was a lot of hype and excitement surrounding Siri when it was first released as part of iOS 5 — and an iPhone 4s exclusive — in 2011. But it didn’t take long for the cracks to show in Siri’s capabilities, and having it firmly in the spotlight instead of just one of many new features didn’t help. Soon these sort of headlines became common:

“Siri is Apple’s Broken Promise” —Gizmodo.

“With Apple’s Siri, a Romance Gone Sour” —New York Times.

“Apple’s Siri Sued for Failing to Live up to Hype” —Telegraph.

Clearly, these weren’t the sort of headlines AAPL was hoping for when it bought Siri (a former app), brought its creator into the fold then released Siri as a key function of its iOS mobile operating system.

Apple did bring much of this on itself by rushing Siri to market in the hope of beating rivals like Google (GOOG) and Microsoft (MSFT) to the punch. Although it wasn’t always clear from the Siri promotional material accompanying the iOS 5 release, the AAPL intelligent personal assistant was beta software — in other words, Apple wasn’t ready to commit to it being ready for prime time. Building up expectations then releasing half-baked software has a way of backfiring.

But Siri has been improving. AAPL continues to analyze data such as the most common Siri queries and refine the software accordingly. Apple has expanded the scope of the questions Siri is able to tackle. With iOS 6 came the ability to answer sports-related questions, for example, and to check movie listings or book restaurant tables, along with the ability to post Twitter (TWTR) or Facebook (FB) updates. With iOS 7, Siri gained new voices, and is now hooked into being able to control system settings,

All the while, AAPL has been expanding Siri’s availability so more iOS devices can use it, taking advantage of better hardware (like dual microphones) to generate better voice query recognition and using accumulated Siri queries at its data centers to improve results.

The payoff has been a steady improvement in Siri accuracy since its 2011 release.

MacRumors published a study by analyst Gene Munster that tracks those improvements. For example, in a noisy environment (just the sort of thing you’d be dealing with when standing on the street and asking Siri for the nearest restaurant, or driving in rush hour traffic and asking Siri for a quicker route home), translation accuracy has improved from 83% correct when iOS 6 was first released to 94%.

There are two areas where AAPL has kept Siri largely out of the picture. Other than the tie-ins to its social media partners, Siri lacks third-party app integration, and unlike Google Now, Siri doesn’t attempt to be predictive.

However, as part of the CarPlay announcement, AAPL listed a handful of music-related apps, including Spotify and iHeartRadio as being supported, with the promise of “even more supported apps coming soon.” That suggests the company is using CarPlay to dip its toe into Siri integration with third-party apps.

Apple’s continuing investment in data centers is undoubtedly part of the slow and steady Siri improvement. Other AAPL technology could be rolled in to make Siri the ultimate in voice-powered personal digital assistants.

For example, imagine a predictive Siri along the lines of Google Now, combined with Apple’s iBeacon technology, an assistant that knows you need something and can notify you when you pass a store offering it on sale. Or a Siri that leverages the AAPL acquisition of Primesense to use an iPhone’s camera to add visual context to the mix.

The problem is that Siri is still struggling to meet the high expectations AAPL set when it was first released. Even as it improves, the baby steps without any major new capabilities leaves a lingering impression of failure (or at least disappointment), and the whole experience has probably made Apple a little gun shy about pushing Siri into new areas. So it’s under-utilized.

Siri is nowhere near the flop of Apple’s previous highly publicized foray into computer intelligence — the Newton and its handwriting recognition. It’s no failure, but Siri is still not living up to its potential.

If Apple gets it right in the end, AAPL could reap the benefit of a technology that dominates mobile search on iOS devices while giving the iPhone and iPad a much-needed boost over Android rivals and opening a whole new market in the auto sector. But the company only gets so many kicks at the can before Siri fatigue sets in permanently and customers simply stop using it.

And meanwhile, the competition is more than happy to steal the spotlight.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2014/03/siri-aapl/.

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